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Why Study Economics?

At its core, economics is the study of choice—why choices need to be made, how choices are made, and the implications of those choices for quality of life. The breadth of this description gives you some indication of the breadth of the discipline. Economic questions enter into all aspects of social life—how wages are determined, whether taxes should be raised, how to best provide equality of opportunity in society, how to protect the environment, how to get rich, or how to use resources to satisfy needs (this is only a short list of the many avenues of economic exploration). If any of these issues are of interest to you, economics is relevant to you.

How do economists explore these questions? Through the development and empirical testing of economic models. These models apply mathematical abstractions to the "real world" so that economic statements may be made precise. This precision points to the key reason that economists are valued by the business and public policy communities—precision helps avoid foolish (and expensive) mistakes. It also explains why economics is a "hot major!"

Many careers are open to majors in economics. A short list of options includes:

Actuary (Analyzes risk, primarily for the insurance industry.)

Attorney

Bank Examiner (Examines bank operations for compliance with state and federal regulations.)

Of course, while having career options is important, what you will be paid also matters. All evidence points in a positive direction. In 1993, the average salary for economists was $2,923 per month; better than the national average for those with BA degrees of $2,269 and only exceeded by engineers. The 2000 Census indicates that a 25-34 year old male with a BA in economics earned on average $58,012 per year; for those 55-64 the figure was $152,870 per year (far greater than for any major degree in Letters, Arts, and Sciences or the College of Business). A 2002 survey of Business Economists indicated that the starting salary was $94,000, with those in the securities industry having a starting salary of $125,000. A 2007 starting salary survey conducted by The Commission on Professionals in Science and Technology found that for 2007 the starting salary for inexperienced Bachelor's Degree recipients in economics was $48,483, an amount exceeded only by those with degrees in engineering (all data from the American Economic Association). Finally, the Bureau of Labor Statistics reports that for 2012 the median pay for economists was $91,860—far better than the national average wage. To the extent that money matters, a degree in economics is a great choice!

Of course, you may not want to be a practicing economist. What professional options are open to you? Many (as the list of potential career options above indicates). However, two main tracks for further professional training stand out: Law School and Business School. Fortunately, a degree in economics offers outstanding preparation for further study and careers in either of these arenas. Evidence for this is seen in the wage differentials earned by those with either an MBA or JD degree. In a study by Black, Sanders and Lowell (2003), it was found that those with a degree in economics (but the appropriate advanced degree) significantly out-earned those with undergraduate degrees in other fields. For instance, MBAs with a BA in economics earned roughly 8 percent more than those with undergraduate degrees in political science (the closest cohort) and nearly 20 percent more than those with undergraduate degrees in business. For those in the legal profession, the closest cohort was again those with political science degrees (trailing by 15 percent) and nearly 50 percent better than those with undergraduate degrees in sociology.